tv Key Capitol Hill Hearings CSPAN July 27, 2015 7:00pm-9:01pm EDT
the american taxpayer to do what we did in the fall of 2008. and clearly, capital -- if nothing else in leverage and liquedy is in so much better place. fsoc has met over four times. they have dealt with a number of institutions through mutual funds and so forth. dealing with non-bank financial institutions that pose risk to the society. looking over the horizon to make sure they're not product lines or institutions that can cause the kind of difficulty in the past. it doesn't mean you'll stop crisis from happening. but we have the ability to spot them. and the liquidation process, the shelby dodd amendment that passed with 90 votes the first amendment up on the floor of the senate deal ing with legislation and stabbing the stress test, the whole unwinding, if you will that was required in the legislation. we think it's going to work.
the fdic has the history in being able to do that. clearly we're in far better shape than we were. of all the economies around the world the one that's doing the best is ours. it wasn't a miracle. it was because of hard work that we put in place here that allowed us to -- >> aren't there unintended consequences such as the issues of market liquidity, for example? >> i do want to comment on one aspect of hansling. i was amazed to read -- i wish i had his ability to say ridiculous thing and be unphased by the potential reaction. he complained nothing has been done since the bill passed about fanny may and freddie mack. the man has been in control of the house of representatives. he's chairman over the committee
that has jurisdiction. it's the great republican myth. the republicans controlled the congress from 1995 to 2006 and did nothing about fanny may and freddie mac. we would have if we retained control worked on it in 2011. the republicans have been in control of the congress and the house certainly and now the senate but the house for five years. they've done nothing about it. as far as the unintended consequences there is one case where they say there was a shortage of lickquidity. i have seen no evidence that this was caused by anything we did by requiring people to have capital. in the first place it was a blip that was clearly dealt with w. it. it had no negative consequences.
when you're in a transition there are things to work out people are getting used to this. i do not believe the requirements for higher capital or having to stand behind the risk you take is a problem. if it is then we've got to learn to live with it. i will say this by the way, the notion that liquidity is the single most important thing to look for in our financial system and everything should give way before greater liquidity is how you get into trouble. because higher capital means less liquidity. anything you do to safe guard the system can diminish liquidity. the biggest one they've been talking about is the supposed problem for the community banks. i ask people when i meet with them what it is in the bill specifically that they have problems with. i do not get answers. in fact, much -- to the extent the bill treats different sized banks differently is in favor of
the community banks. they pay less now for fdic insurance. the increase in deposit insurance maximum was done at their request to diminish the competitiveness. i think what the opponents of the bill has done, it's very clever. they've done a bait and switch. they talk about how the community banks have been hurt. when they get a chance to legislate they help the big banks. the one case where they use their clout by holding the appropriations bill hostage, they amended the law regarding pushouts. i don't know many $3 billion banks that had to worry about deesh -- were setting up a subsidiary. they talk about the community banks but work to help the big ones. >> let me go back to your point.
on the fany and freddie issue, the reason we ended up with 75 votes was because we had cooperation. it was not for lack of trying we couldn't come up with an answer that would be satisfactory. which is a separate issue. to barney's point, this is tail wagging dog that was the source of the problem. secondly your question unintended consequences that's not a reason not to legislate. there are always going to be potential unintended consequences. there will probably be things down the road you'll want to change and modify. there will be some unintended consequences. you don't sit around and do nothing. you'd never legislate if that were going to be the case. >> one other point, i want to concede. the criticism that we didn't end
two big to fail, i think we have done. the proof is some institutions are clearly in that category. other institutions are subject to the discretionary judgment to the fsoc. with one exception they hate the idea. they are fighting against it. this notion it's a great benefit to be in that category, why is met life suing to get out of it? why are midsized banks trying to push up to $50 billion. the criticism comes from tim geithner and others in the financial community that we made it too hard to bail out banks. that's the criticism you're getting. i disagree with it. what they're saying is there may come a time in america when it's important for the public to come to the aid of a major institution. given what we've been through, if that's the case, i hope it
isn't, then you are going to have to persuade congress. the notion you would give the executive branch authority to do that misrepresents history. there was one allegation the bill contributed to a problem with liquidity. and it seems to me they got the incentives mixed up in that. but that's the one thing in five years that they allege was damaging. and it lasted a couple hours. >> you mentioned the swaps pushout rule the appeal you had called a frightening precedent. there have been 139 bills introduced to either rupeal dodd frank althoughor to change the law. where do you guys think -- how durable do you think this law is going to be? where do you think it will be five years from now? >> using the appropriations
bill. so getting that through not on its merits but by threatening -- i talked to the secretary of treasury and others the fear was the republicans would put a short term appropriations bill through and that would have damaged the economy. my own belief is the president vetoed it on those grounds and said this is what this is about. this is about how they can manipulate derivatives, they would have backed down. in any case the president -- it was not so much the substance on that one. i think that was a huge hole in the bill. it was the precedent of how they do it. i think at this point they have talked about repeal. compare obamacare to financial reform. they have had 50 60 votes on repealing the healthcare bill. there have been no votes on repealing the financial reform bill because they know it's popular. the fact i haven't seen that many bills repealed. the only bill i saw in 2011 to
repeal the whole thing came from michelle bachmann who was not in the leadership echelon of the republican delegation from minnesota. so the -- they're afraid of t. they know it's popular. that's why they make their big arguments about the community banks. the danger is if a republican is elected president i think they will be afraid of an all out repeal. i think the danger is they will appoint the kind of regulators they have appointed previously who won't use the powers they were given. >> richard shelby with and others -- i know it sounds quaint, we happen to be good friends. richard's introduced legislation on banking. if you look at it carefully there is very little to deal with dodd frank. there is nothing on the major provisions he wrote in the bill. it's different some of the ideas he's proposing which is important to note. and also i mean, just this --
there is this chatter about undermining it. there is some things -- to go back to your earlier question. i regret we didn't have funding for the fcc. what's killed our efforts in the past to bend a star, the federal trade commission is an example. we did the cell funding of the consumer financial protection bureau which i think was smart. that's a source of great contention. you can't sit there and strangle an agency by depriving funding to do its job. the one thing i worry about the healthcare bill has financial interests that care about the bill. they're going to be reluctant to have any major changes to that. the dodd frank legislation, the financial reform bill doesn't have large financial interests in favor of the bill. a lot of banks and institutions are making wonderful changes ahead of the regulators in many cases. the culture has changed
dramatically. i was speaking to a former staff member of mine. he says i can't tell you the number of risk committees i attend. they didn't exist previously. institutions are sitting around and thinking about product lines or other decisions they're making. are there implications. that didn't happen before p. there's nothing in our bill requiring that in an institution. it gives you a sense of how the culture is changing within financial institutions. many institutions are way ahead of the regulators and actually implementing the ideas that the legislation requires. so i'm optimistic about what's occurring in the marketplace. i'm worried because we don't have major financial interests that are going to defend our product as is the case with healthcare. >> i agree with that. but you have to -- you know reality is reality. if hillary clintonson e is elected in 2016, the bill will survive even if there would be vetoes.
i don't think -- they're not looking for a head on conflict. it's one of the most popular things the government has done. by the end of the next presidential term, by 2020, these practices are going to be embedded. the president says here is the new deal. you look at the rhetoric of the late 30's and 40's. what the sec, the securities and exchange act and the investing companies they were predicted by the financial community to be terrible. by the hend of world war 2 they had gotten used to them. after 2020 tafter 10 years the bill will have taken root. it's not going to be in their interest to introduce all this instability. so my major fear is it will get under administered. i don't think many of the powers went back -- the other point i
would make -- i not about as we were talking. to some extent we've diminished -- i think what we have diminished is their ability to be kind of self-mobilizing. we have diminished the ability of the financial community to be a profit center on its own as opposed to being the financial intermediary. the role of the financial community is to facilitate real economic activity, financing. it's clear that with the inventions of the 80s and 90s, the financial industry began to innovate products. the profit it would make for the institutions themselves rather than some function it served for the productive economy. i will say so people talk about reductions and activity yeah, i think that's a good thing. >> facts bear that out. historically financial institutions represent 10% and 20% of the profitability.
it rose to around 40% at the height before the crisis broke. it was a massive increase. exactly what barney is talking about. >> before you arrived on stage we heard dennis talk about the importance of context and remembering how bad things got during the crisis in 2008. can you guys sort of take a trip down memory lane. when did you realize exactly the depth of this financial crisis? was it during the meeting with burn bernanke or before this? >> thanks for doing this. it's terrific. i should have said that at the outset. i've been stunned a bill. paulson came out and said in the summer of 2006 jack reed and jim bunting had hearings in '06 on the mortgage crisis. they were in the majority, in the senate banking committee. when i took over as chairman in january for the first time of '07, we had almost 90 hearings
that year alone or gatherings on the mortgage crisis growing. you could be hard pressed to get them to show up. hank paulson talked about china. he didn't want to talk about the issues. he had bear sterns over st. patrick's day weekend of 2008. that was one off, an isolated case, don't worry about t. this thing was cratering. we're talking about the crisis in the fall of '08. the crisis began long before that. a refusal to recognize what was occurring. all the evidence was out there. this was what was disturbing. it was going to be a big deal anyway. but it could have been a lot less of a big deal had we acted earlier to stop the metastasizing in the mortgage market. it blows up six months later to the day with aig. you have the window that we scurried around and had the meeting in nancy pelosi's office where paulson said and i'll
quote him. i remember unless you act speaking to the 15 or so of that in that night. unless you act within a matter of days the entire financial system of this country and a good part of the world will met down. that's the important central banker in the world. having just told the president that. that's when it took us two weeks to do it to write the tarp legislation. we did it in the senate and house. you had people who lost their seats, has barney has said it was the single most unpopular thing we did in our tenure in congress and probably the most necessary. clearly this process began a lot earlier than the fall of 2008. >> my -- i differ a little bit from chris. it is true that we saw the mortgage crisis. i want to go back. clearly mortgages given to people who shouldn't have gotten them was at the core of this. what happened the morgetgages were
given and bundled up -- the mortgages were the bullets. they came up with these inventive guns that shot them over the system. the start would the mortgages and false swaps are sold against the packages. the key was the bad mortgages. there was this myth was it's because liberals wanted to give all these housing to poor people. in 1994, i was not very acivetative passed the homeowner's equity protection act which gave the frl re federal reserve to regulate mortgages. greenespn respan refused to do it. it is true that these mortgages of loaning to people of this sort carry a high risk of non-repayment. it's a risk worth taking because
you cannot have a capitalist society without strong public support for property rights. and this creates support for property rights. what happens is he refused to do t. a group of states start to act. georgia, new jersey, north carolina. to ban -- regulate mortgage practices. the bush administration responds in 2004 by a blanket preemption of any state bank regulation of national banks. the only thing the states could do was to enforce the fire code. and say you couldn't discriminate on racial grounds. it used to be that the states could not do things that would interfere with their legitimate businesses. total blanket preemption. one of the things we did was to undo that and restored the right of the states to do not as much as before but a significant
amount of legislation. that's the second way to deal with subprime mortgages. second, it's the states. and the bush administration preempts it. at that point, crl tried to draft a bill. spencer vasquez is chairman of the subcommittee and we work on the legislation. these are facts. tom delay tells mike oxly -- i know this for a fact -- we're not in the business of regulating like that. he ordered oxly to tell vazsquez to stop the effort. things die until 2007 when we take over. in november of 2007 we get a bill through on the democratic control to regulate subprime
submortgages. the watt street journal has an article, you can look it up and attacks me for keeping low income people, especially minorities from getting homes. and says incredibly to me why this concern about the subprime loans? 80% of them are paying on time. like that was a good statistic. 80%. and we did get the bill through the house. chris runs into opposition from the conservatives in the senate. you still have the 60 vote rule. we took the legislation we had worked on jointly and it's part of the financial reform bill. that's the history. what i didn't see was how much -- how badly it would affect the rest of the system. i did hear from paulson and bernanke for their concerns. in fact they did to their credit it seems to me come to us in 2008 and say look, here's the problem before lehman. they say we have two choices.
if a big bank goes bad. we can let it go bankrupt and pay none of the debt or take it over and we pay all the debt. sure enough that's what played out in lehman and aig. so i -- we did see the subprime thing. i did not see the extent to which it was going to be so infectious for the economy. >> senator dodd, your original first draft of the bill that would eventually become the dodd frank bill, was much more radical than the bill that was actually passed. you had three agencies, can you talk a little bit about your thinking at the time, why you decided to make such a bold statement with your draft legislation? and some of the political realities that sort of went into the crafting of what eventually became the bill we know. >> the discussion draft in november 2009. today, it's -- i think there are
a lot of institutions that would like for someone to revive the idea. the idea of creating a single regulator would have a larger constituency than it did then. at the end of the process while we wanted to get rid of the unnecessary bureacracy -- the regulatory bodies, this wasn't a sweeping sort of architecture. everything time there was a major crisis some new regulatory body that got created over the last 80 or 90 years. >> this one as well. >> the idea was here was creating one single regulator as a way of creating more efficiencies within the system. people went out shopping to find a regulator that was of least resistance to do what they wanted to doment that was the basic idea. we got three votes for t. people screaming bloody murder about the thing.
that's what you try to do as a chairman of a committee. you test out ideas and find out what the tipping points are. we incorporated the idea -- not a illegitimate idea, it's whether you can get harmonization of that. you need to create a system for that to occur. while it was called radical at the time. today i think people may have different thoughts about t. that was the genesis of the idea. >> he's the fundamental problem with that. that is you know, it's hard to do a lot of tough things at once. we did very difficult politically hard complicated -- my head heard after. when i retired, when i announced my retirement. i celebrated two things marked my retirement. first of all it was in november. i announced i was not going to
march in the christmas parade in the cold. secondly. >> fair enough. >> i began to sing in my own head my version of an old song ain't going to study derivatives no more. i was very happy to get rid of t. here's the deal there are political resistances to substantive change and political resistances to institutional change. trying to do them both in one bill was what -- look we barely got 60 votes in the senate. we lost -- came very close to losing a couple of the key provisions in the house. it was never going to be possible to do them both. then there was some specific ones. one was that the fed became very controversial. so there were people who would be furious if you gave the fed more power and less power. one problem i had never anticipated, but the independent
community bankers complained because part of what chris did was to have one regulator and the community banks came and said the state chartered banks smaller banks do not want to share a regulator with the big banks. they were afraid if it was the same regulator they would be overwhelmed. we couldn't deal with it. we did get rid of the office of supervision. there was clear duplication between the occ. my own view was -- they said they were the regulator for country wide and aig and for anybody eltsse who didn't want to be regulated. i had a fall back. i wanted to change it to the office of fig leaf dispenseation.
we had a hard job in making the substantive changes. it was multiplied by trying to do the regulatory. the single biggest obstacles was state chartered banked. that's one of the things people don't realize we have the dual banking system, most countries don't. that's the cause of a great deal of the complexity of our system. unless you are prepared to do away with it you have to live with it. >> financial reforms should not be a partisan issue. however, i believe in the senate there was only three republicans who actually voted for the dodd frank bill. can you guys talk a little bit about your efforts to garner support? >> i can speak to the house side. the bill, includes an awful lot of republican ideas. the actual vote itself at the end of the day you end 1you end 1 the numbers you cited. one evening in the fall i think
of '09. i asked the members of the committee to gather in the hearing room on the first floor of the capitol. i didn't tell me own staff what i was going to do. what i did, it's a little risky at the time, i went in and i announced i was pairings to work on the splaigzlegislations. i announced cocker andrker and warner would work on too big to fail. i'd be work ing with shelby on consumer protection bureau. jack reed and jud greg would work on the derivative section. i waited for somebody to say who the hell are you to tell us what we're going to do? they went off with pairs with staff. this was too big a job to take
on. they made every single one of them significant and worth while contributions to the product you see today. they didn't finish it in every case. they came close. they got to contribute a lot in some cases. in the case of jack lead and jud they couldn't come to closure, but contributed a lot of what is in the bill today as did mark warner and bob corker. they were tremendous in what they contributed. the idea is one i watched having sat on the labor committee for 20 years. he would always ask democrats and republicans to work together on products that were complicated to try to put something together we could all support. it's saddening in a way. i did certain things. we took provisions of the bill, the provisions in the bill deal ing with the congo sam brownback amendment. i took the dick luger
legislation with extracting sdree industries. i'm looking at amy who can remember some of them. she was general counsel during the consideration of the bill. we made an effort to bring people in, like you normally do in a process. many cases those people end up being supportive. they may not like some parts of the bill. substantially the bill reflects an awful lot of the contribution i described earlier. >> i became ranking member in 2003. with mike oxly. he was in charge but i -- apparently i had power i didn't realize. because dick cheney wrote in his book in 2000, he said in 2003, the administration tried to get reform of fany may and freddie
mac killed the bill. i wasn't chairman of the committee until '07. i was distracted -- i realized i had been paid a great honor. having dick cheney lie about what i was doing in 2003 kind of put me in the same category as weapons of mass destruction in iraq. it's an unusually -- >> barney md's. >> i become chairman. the house did pass a bill in 2005. bipartisan in the house. but the bush administration and secretary -- liked the bill. but the bush administration didn't think it went far enough. it died in the senate because senate republicans didn't like what the house republicans had done. we worked together on it. then i become chairman. and the republicans decide in the house that they are going to go in opposition. here is how it manifested
itself. i mentioned the question of subprime loans. the chairman of the subcommittee it tried to work with us and was overruled. in 2007 when he's the ranking member of the full committee he worked with us. and we did adopt in 2007 a set of subprime restrictions which never did pass the senate in 2008. but became part of the bill. that's the basic law. and we were working with spencer balkts on the bill. he voted for the bill. as a result of his working with us and bringing some republicans along, the more conservative republicans who were dominant on that committee and were running the committee went to the house leadership and tried to get him dumped. this was reported in the hill and politico. they trie he had to fight to save his ranking membership. the price he paid was that they sent minders over from the republican leadership to control him. there would be cases when a statement would come out and i would say how can you say that?
he said i didn't say it. i was told that's what i was going to say. at that point, he was penalized for working with us. and he got the message. so from then on there was no cooperation. and that -- then when president obama comes in, frankly this is part of the problem the republicans -- when bush was president, there was some instinct on the part of some republicans to help the administration. when obama was president, they had no partisan reason to want to be work ing with the administration. and no ideological reason y. never had a chance. there were some republicans on the committee gary miller john miller interested in houdssing and stuff. they were going to be totally in opposition. you say, it shouldn't be partisan. yeah, but i shouldn't have to choose between being fat and being hungry. but, you know i should -- it is what it is.
>> i should have mentioned because you asked the question susan collins was incredibly helpful and did a tremendous job. not just by voting for the bill but also by adding substance. scott brown of massachusetts, actually. was a vote -- >> yeah, i developed a relationship with scott brown. what did we get two in the house? joe cowell from new orleans -- an accidental republican congressman because he beat bill jefferson in his freezer. and then mike -- something i think voted for the bill who lost the senate primary to the lady who wasn't a witch. >> those were republicans in the senate were curamshourageouscourageous. any one of them would have left the bill would have died. >> people said how many did you
have like one extra vote? no, we didn't. those three agreed for their own protection they had to do it together. even there we get the three votes -- relax. i didn't get one of those phone calls i hated to get. chris calls and says we've got a problem. we said we -- this is when the republicans -- hadn't been enough attention to we paid for the bill by an assessment on financial institutions that have $50 billion or more in assets. cbl told us it was $20 billion. it was going to cost $20 billion in ten years. we had to come up with $20 billion. fine. we will assess the financial institutions. at that point, three republicans, it became too much for them. chris gets word for them that they can't vote for the bill. we didn't need any republican votes in the conference. but chris announced -- tells me we have been told that we can't
do it. now we had convened -- finalized the conference banged the gavel signed the bill. one of the nice things about conference committees, there are no rules. secondly, nobody had had one in a long time. we were able -- >> it was a unique experience. i saw allen furman the other day who was the parlumuitarian. >> let me finish so you can explain what happened. he'll tell you what he thinks. chris calls me and says they won't vote for the bill. i said okay. i announced that the conference was reconvening. and it reconvened and we amended the bill we had already signed off on. we took it out of extra tarp money and that was it. >> the irony was it was 4:00 in the morning. i forget which member of the republican side of the house or senate made a suggestion, and i
thought if we can all live with that. this will take a republican idea and have ability to get this passed with that idea. as barney pointed out there was a strenuous objection. but we had signed -- we signed the conference report. this is where it gets really delicate. it didn't happen as quite as quickly as barney suggested. it was a major decision for the parlumenitarian of the senate. when you sign conference support support, there are -- >> in the senate. >> which is usually the opposite way around. >> you asked, i didn't ask. [ laughter ] i had to ask. when you sign the conference report as long as it's not been filed or voted on then it is still potentially a live conference. but that took a good day, more than a day for the
parlumenitarian to come around. there had been a experience some years before where it changed a transportation bill and create ad ed a fee by-passes for a highway in the florida. they were delicate about when is a conference report a conference report. we were able to go back and change it and pass it. >> i want to turn to some questions from the audience now. we have time for just a few. the first one is, would holding individuals accountable for malfeasance or violations improve the safety of the financial system? >> it might. i believe we have enough other factors in there. i am puzzled why no one was ever found guilty. i do want to say to some of my liberal friends, we have long held to the importance of due process. and the central element is you cannot be criminally prosecuted if you could not have reasoninably known the action for which you were being
prosecuted is criminal. if the law was there and you didn't know it you're not protected. there was ambiguyityambiguity. with all that, i still don't understand why they didn't prosecute more people. >> yeah, i mean, barney's absolutely right. what happened in a number of cases what they were doing was actually legal. it was not illegal or highly irresponsible to put it mildly in a sense. this should have been more of an effort. we tried to do some things in there that as a result after the fact in a way that create situations where by misfeasance or malfeasance would be criminal. we're deal ing with a banking bill that would require others to -- >> i don't know about the senate i didn't have jurisdiction in the committee i chaired. >> that's the same where we were. we would have had another committee involved in all of it. we've done things like the -- that i think are critically
important. it don't get as much attention when people talk about it. the whistle blowing legislation is a major change. they can go directly to governmental bodies where wrong doing was occurred. disgruntled employees. i don't know the numbers but i'm told by the sec this has turned into being a tremendous source of information. it's not radical idea. but every three years, god forbid shareholders and the owners of the companies ought to have an opportunity to vote on whether things are being well-managed. commonsation compensation provisions which aren't really done. it injects -- >> representative frank you have the last word. >> a narrow say on pay would
lead to the ouster of citi corp. he won his pay by such a narrow margin that was the reason he left. involuntarily. >> senator chris dodd, representative barney frank thank you so much for coming here today. [ applause ] tonight on the communicators. fcc commissioner michael o'reilly on key issues about the fcc like regulating the internet and the public's influence. >> when an item is made for an open meeting and it's present today the commission level that document should be made available publicly. i think that would provide an opportunity for everyone to comment on what we're thinking. it would also allow people to hone in on issues they may see as problematic. now we have people who raise concerns regarding our items. they often don't know what's being put forward.
they're doing rifle shots in many different scattered structures. you know and that's problematic. i'd rather people target exactly where they'd like to see fixes and not spend time on things that don't need attention. >> tonight on the communicators on c span 2. the c span cities tour work ing with our cable affiliates visits cities across the country. this weekend we're joined bide comcast to learn more about the life and history of augusta georgia. jimmy dietwas awarded the medal for hair ow. and the medal of honor for his actions in the world war 2. >> about two years ago a decision was made to do a military display a permanent military display to honor jimmy dais. when i did my research on the book i went through over 9,000
carnegie medal recipients and the 3,500 or so medal of honor recipients. he's the only person ever to have earned both awards. he would almost for sure say he did not deserve it. he might point out to somebody else who was more heroic than he was. he was very humble. he never talked about the carnegie medal when i interviewed people who knew him when i did the book a long time ago, people knew him well. i said tell me what about the carnegie medal, he hernedearned when he was 19. i have known a lot of medal honor recipients most of them will tell you i didn't deserve this medal. it should have been given to somebody else. it's a piece of humility we can all learn from. >> we visit the boyhood home of our 28th president woodrow will.
>> president wilson moved to augusta when he was a child. he moved in this house when he was three. his first memory was in november of 1860 before he was four years old. he was standing on the front gate out in front of the house. and two men came by in a hurry with very excited tones and voice. and he said abraham lincoln has been elected president and there's going to be a war. so young tommy ran inside to ask his father what was war. what did that mean. why were they so excited? we think it's remarkable his very first memory was about another president, abraham lincoln and about another war, the civil war. of course wilson would have to lead the country through world war i. >> see all of our pramgzograms saturday from 2:00 eastern.
on c span 2. nigerian president was in the u.s. this past week. his visit included a meeting with president obama and keynote address at the u.s. chamber of commerce where he talked about u.s. nigeria elections. he won election eight weeks ago, this was his first time traveling to the u.s. [ applause ] >> please sit down, ladies and gentlemen. i thank mr. paul hanks started it by reading his speech. i think i am constrained to follow suit. when we read our speeches in the other room, the audience was so
small. in fact i wonder why some of the governors have turned down our invitation only for me to find them here. now, since we are complete, i, too, will read my speech. [ applause ] the governors here are present and the former governor of burr nuth seat. the center of the battle ground of boko haram. the governor of edal state.
and the rest eof my team. the chairman of council in africa, mr. hayes. the corporate council of africa. our ambassador to the united states of america. and corporate personnel of are industry here present. i'm surprised to meet people here very close friend of my big friend. i'm referring to the chief executive to nabu. who is here. i wasn't surprised to meet him.
but i was surprised to be meet his chief executive officer. the lady who was brought by the head of the bank. ladies and gentlemen, let me begin by saying how pleased i am to be here tonight. and to be treated to this elaborate dinner by the united states chamber of commerce and corporate council on africa. you done so many to help us here. it speaks well of the growing partnership between nigeria and the united states. i would like to commend the chamber for assembling leading united states companies whose top executives have taken me through their vision and
activities in nigeria. my intention here tonight is to simply bring our message of hope about my country's future and the opportunities that are available for united states' investors. ladies and gentlemen due to the long-standing excellent relations between nigeria and the united states. we found it necessarily by agreement in 2010. as the framework to guide our direction. the agreement provides a template to effectively and efficiently manage the political, diplomatic social economic and security operation
between nigeria and the united states. the need to strengthen our bilateral bilateral bilateral relations have been organized on power, agriculture and infrastructure. these directions have led to increased economic and investment activities between nigeria and the united states. i would like to see these broaden and sustained because a huge potential is there and our two countries to improve the level of economic and trade relations beyond the current levels. it's my intention to create the necessary environment for future investment in nigeria. we are the most populace nation in africa. with vast human and natural
resources. and blessed with abundant young skilled work force. a skilled workforce. we are therefore prime candidate to become the destination of tourist for united states and africa. investors know from experience that the nigerian investment than any other in africa. i would work seriously to welcome new investors to our country. what i lay on the table tonight is for the business community in the united states and nigeria to take advantage of the declarations between our two countries for trade and
investment activities, including joint venture projects and sectors of the nigerian economy including power generation gas, food and agriculture mining, health sector, and other sectors of our economy to take advantage of the growth and opportunity act. ladies and gentlemen while i roll our governments to facilitate and promote economy growth, the private sector must assume an increasing role as part of growth. this is even more so for us in nye veer ya as we take steps in diversifying our economy. in particular, we will welcome
general invest issors who are willing to come to nigeria for solid minerals exploration. generating employment will run on key campaign promises. i will do my best to keep this promise. i will do my best to keep this promise. >> [ applause ]. >> there is no other way to expand economic opportunities than boosts domestic manufacturing and infrastructure and industrialization. let me repeat. nigeria will partner with general investors who are willing to join us to achieve our economy objectives. and at the same time for that investment.
there is more to nigeria than oil. this is why i will continue to stress the need for increased united states investment in nonoil sectors. the administration could be attentive to the needs of the business community. and it will strengthen the sectors that drive the growth. [ applause ]. we intend to reduce waste with focus prudence accountability, and good governance. respect for the rule of law, compliance with and object solvens of contractual agreements, ease of doing business are some of the
measures that the federal government will promote. ladies and gentlemen let's require heavy funding which cannot be in nigeria alone. i will use this literal to encourage the united states for investment in agencies such as oversea, invest in corporation and united states export, to increase excess and funding of such businesses on favorable terms. as you are aware, stable power reduces the cost of doing business. nigeria, therefore, requires the investment of the united states
energy companies to improve our powers of life while we are aware of some of the challenges nigeria is prepared to tackle the challenges as they relate to gas shortage and pipeline utilization. both of which are known to have in recent times mitigated the transmission and distribution of power to the consumers. ladies and gentlemen the kind of environment can only thrive under secure and stable environment. as such, i give full attention to the fight against boko haram in surgery in cooperation with nigeria's immediate neighbors.
to this end, nigeria has pledged 1 million united states dollars to the coalition to provide the requisite resources for the task force to effectively function. last month nigeria released money of this pledge and stand ready to liquidate its pledge was the task force for labor account commissioner. for the contribution of $5 million to this campaign. every a little bit helps in this all-important fight against terrorism. this is an end in ensuring the protection of every inch of nigeria's territory.
the title and settlements of displaced persons and providing the atmosphere for assumption of normal life. in conclusion i would like to remind you all that we are continuing with programs in sectors ranging from telecommunications, energy gas, minerals aviation health, and infrastructure which will improve architecture. may i therefore see the opportunity to formally invite the american business community to take advantage of our liberal
trade and investment climate to do business in nigeria. i thank you very much for your attention. [ applause ]. on the next washington journal, former transportation secretary ray lahood talks about the highway trust fund and congressional efforts to funding before money runs out at the end of the week. and morning consult editor-in-chief meghan mccarthy on the health care law. >> we will also take your phone calls and look for your comments on facebook and twitter. washington journal is live every day 7:00 a.m. eastern on c-span.
when congress is in session, c-span3 brings you more of the best access to congress. with live coverage of hearings news conferences, and key public affairs events. and every weekend it's american history tv traveling to historic sites, discussions with authors and historians and eyewitness accounts of events that defined the nation. c-span3, coverage of congress and american history tv. coming up on c-span3 va secretary robert mcdonald speaking at a veterans convention today in maryland. then recent testimony from secretary mcdonald at a house veterans a affairs hearing on the va's budget. and later a hearing on immigration enforcement and so-called sanctuary cities. veterans affairs secretary robert mcdonald was at
maryland's national harbor today, speaking at this year's vet court conference. he talked about some of the issues facing today's veterans and what the administration was doing to improve va operations. this is half an hour. [ applause ]. hi. how are you? that's great. thank you. thank you. that's beautiful. thank you very much. it's a thrill for me to be here this morning with you. as the judge said i am the biggest believer in veteran treatments courts that there could ever be. i can't think of any better way to keep veterans out of
incarceration, stop veterans homelessness. i'm so thankful to all of you here today for the work that you do to help us care for veterans. one of the things that became very clear to me in los angeles as you may have seen in that film, is that we in the va can't do this job by ourselves. we need the help of all layers of government nine government organizations, businesses and others to be a able to care in the right way for veterans. it's important to have collaboration and partnerships. i love this picture of judge russell and myself as we're shaking hands across the table at va. because that's the kind of partnerships that we need to have. that's the kind of collaboration that we need to have. [ applause ]. nationally we've got amonmental task.
so it has to really be a community effort. we have to work community by community, city by city, state by state. locally, it's a huge undertaking. we know that we can't succeed only from the federal government. we've got to make those collaborative connections. 2016 is fast approaching. and we in the va have made a number of commitments for the end of 2015. obviously, our goal is to end veterans homelessness. and we have a huge role to play in doing that. but so do you. and we're incredibly thankful for your partnership that there's an in explicable link between justice involvement and homelessness. as i was looking at all the studies that i looked at as i came into this role, it was very clear that incarceration is like a one-way ticket to homelessness. so if we could work together to end incarceration we have a
great chance of ending homelessness. we need to give veterans an off-ramp from that inextricable link. two weeks ago, president obama described the united states as a nation of second chances. and i deeply believe that. well nobody deserves a second chance more than those who have protected our country. the 1% that is protected the 100% of our country. they gave us the opportunity to prosper. they preserved our liberty and our freedom. and how many of you are veterans here in this room? if you wouldn't mind please stand up and accept all the applause of us here. [ applause ]. thank you for your service.
>> how many of you are serving through boot camp? any of you going to mentor boot camp? good luck to you and thanks for your commitment. a commitment to make everyone's lives even better. there is nothing more noble than to live a life of purpose. wouldn't it be terribly to simply meander through life without direction. but all of you have purpose, and that's represented by you being here. let me tell you a quick story about an old man and a young man. and the old man is is on a beach. sit littered with starfish up and down the beach. the tide has gone out. as a result of that these starfish were kind of baking in the sun and vulnerable to lose their lives.
the old man walk the beach, pick them up and throw them back into the sea. the young man saw this. oftentimes when we're young, we become cynical iconoclastic. and the young man said old man what are you doing? he said, well i'm picking up starfish and throwing them back in the sea. and he said, yeah, but look down the beach. you see thousands and thousands and thousands of starfish. there is no way you will be able to pick all the starfish up and throw them back in the sea. so why bother? and the old man picked up another starfish and put it back in the water and he said it makes a difference to just one. and making a difference to just one is really how to measure our lives. do we make a difference in the life of at least one person every single day.
it certainly is a question i ask myself when i leave my office in the evening. have i made a difference in the life of at least were one veteran that day. well, i'm here to thank you for the difference you're making in the lives of so many veterans through the work that you're doing. we in the va think that we have the most highest order calling in the world. and that's to care for those who are born to battle their survivors and their families. there's no higher calling. we also think we have the best values is in the world integrity, commitment, respect, and excellence. if we live our lives according to that mission and according to those values, there's no question that we can make a difference for all the veterans who have served our country. serving justice in all veterans
is an important part of that. you're embracing that mission. you've got your arms around it. and even as you wrap your arms around it, we have many veterans who need us and who need you. look at the marines in this formation. which would you imagine are going to become involved in the criminal justice system? which would you imagine could potentially be homeless? well, too many have and more will. but thanks to you, thanks to you there's an off-ramp. an off-ramp to a second chance. and for that, we thank you deeply. now, you've heard the testimonials. charles said veterans courts kept me alive kept me going. eric said veterans treatments courts offered me the chance of a lifetime.
nick told me this story. he said veterans treatments courts saved my life. i've heard many of these stories. they start with the criminal justice system. they start with a peer counselor. they start with the veteran treatments courts. then the individual goes on. they use their g.i. bill. they get community college training. maybe they get a four-year degree. maybe they even go on to law school. maybe they end up paying it forward like many of you here of working on behalf of other veterans. these are the mission of the v.a. this is the i care values at work. no other group of people better personify that mission than you do. so i thank you all. and i pray that god will continue to bless you all in
your work. you're helping one of our priorities. you're helping veterans return or reintegrate with communities and families successfully. now, you showed us this way. veteran treatments courts is a huge innovation. and since judge russell kicked things off, we now have 351 veterans courts nationwide. we're working every day to increase that number and to increase the number of counselors we have to work with you. while va leads the way in health care, we've done things like the first liver transplant the first cardiac pace maker the first time that a nurse came up with the idea that use a bar code to connect patients with medicine and medical records. the first electronic medical record. we invented the nicotine patch.
we also vented the singles vaccine. so a lot of innovations have come from the va. as a result of that, we have three nobel prizes and seven lasker awards. but innovation that didn't come from the va is receipt advance courts. you taught us how to do this. your partnership model, the model collaboration of a core concept executed federally and locally, tailored to meet every specific needs. you've taught us this. this is a perfect example of how communities can collaborate in holistic ways. there's the judge the court staff supervising, va and community providers delivering treatments simultaneously. there's volunteer veteran mentors providing moral support camaraderie and training. this is the best in class kind of collaboration we could possibly have.
all of us working together synergistically for the benefit of a veteran. and let me remind you that we're also working hard in all of this to help families as well. as part of our homelessness effort we have vouchers. one of my favorite programs is a program that provides support for families so we show we're not only caring for the veteran but their family as well. certainly when a veteran joins the service or when a service member joins the service, the family goes with them. and when they deploy the family goes with them as well. so we have to care for families. we need more of that kind of innovation. we need more creative solutions that we can use. we in the va are willing to try anything that will work. all we're concerned about is getting the numerical outcome at the end, making sure we get the human outcome of a veteran who is better off.
now, we're also working on many technological solutions, things like telehealth and also regional veterans courts. we're committed to creative approaches to make these crucial partnerships work. you all here in this room are at the nexus of justice involvement and homelessness. we want to share where we are with any veterans homelessness. as you can see by this chart, veterans homelessness is down 33% from 2010 to 2014. it's down 40% for chronic homeless. this is because of the president's strong support his focus, and the funding that we've received. funding is important for supportive services for permanent and transitional housing, for prevention and
treatment, for employment and job training. since 2008, funding programs benefiting veterans homelessness have increased 170s from $2.4 billion in 2008 to $6.5 billion in 2015. but it's about a lot more than just money. we have to know how to spend that money. well, we've learned what works and, importantly, very importantly, we have learned what doesn't work. we settled on evidence-based strategies. and you see them here on this chart. housing first. housing first. what a beautiful strategy. i mean, it recognizes the hierarchy of needs. we have to get the lowest level needle out of the way first so we can work on the other needs of the veteran. if we don't get the veteran under a roof, there's no way we can work on their treatment.
so temporary housing is the most important thing to do first. and then deal with the other issues that may have caused homelessness. second, no wrong door. coordinating the assessment and entry systems and providing help no matter where the veteran turns. i love it when i go into a city like los angeles. i visited recently. they have an access program where every door you go in leads to the same access, to the treatment and the housing. outreach and engagement. seeking homeless veterans getting to know them and their needs. caring and sharing lists with partners. while we in the va are doing a good job trying to hire social workers and counselors there is no substitute for the peer counselor. for the veteran who has been there, the veteran who has been through the need. i was recently in tucson. there were a lot of veterans out in the desert living there homeless.
and i met one young man, doug was his name, who literally goes into the desert and comes back and brings those veterans in and gets them under a roof. the fact that doug has been a veteran and he's been homeless and been in the desert that gives him that ability to build trust with veterans to get them out of the desert. that outreach and engagement is so critically important. justice outreach. connecting veterans with services. this becomes critically important. grassroots mobilization. how do we get things mobilized at a local level get the local government together, local landlords landlords. finding landlords willing to rent at the voucher amount. i go to the cities, get with the mayors. we ask all the landlords to get into a room like this one today
and say we would like you to give you a players challenge. we will provide the care for the veterans. but we need that roof. and many and many of the veterans have stood up. in fact, marilee in san francisco told me that he was so thrilled because the chinese-american community in san francisco saw it as their patriotic duty to rent their spaces to veterans for the correct amount. i can't stress enough the importance of the grassroots effort. only so much can be done nationally. only so much can be done by a federal agency like the va. we provide the strategy and support. we provide the funding. but ending veterans homelessness has to happen community by community. as i said, it's so much more than money. it's people like you who are committed to veterans and evidence-based strategies that work. another community strategy which
is working is the mayor's challenge. phoenix, salt lake city, new orleans, have all reached major milestones the past year. in 2014, new orleans of course was the first major city to declare that they had ended veterans homelessness. houston recently announced that they have created a system that will help end and prevent homelessness now going forward. we expect many more cities to declare their results over the coming months. let me tell you, nobody has done more to help veterans homelessness than first lady michelle obama and the president. they have been there all along the way, provided the support and the leadership and the enthusiasm to get this done. partnership is one of our strategies that really works.
we use the same principles in these partnerships that are valuable to your efforts working within the justice system involving veterans. so far we serve, you know -- we in the va are only allowed to serve those veterans who have honorable discharges. so those veterans who have less than honorable discharges, the 15% of veterans re-rely on community partnership toss get that done. i was in boston not too long ago. i visited an organization named home base. historically, va had seen home base as competition. competition to provide the care for veterans with post-traumatic stress or with traumatic brain injury. well, i don't think that way. we in the va don't think that way. we embrace all organizations trying to help veterans. we want to partner with them. because home base not only provides great outcomes for
veterans with post-traumatic stress or traumatic brain injury, but they can serve the 15% of veterans that got less than honorable discharges that we in the va can't serve by law. so these strategic partnerships are not only critical and not only smart to achieving our strategy but in my mind they're also about ethics and morals because we need to make sure no veteran is left behind. we also work with public housing authorities to set aside section 8 vouchers. recently i went on a multicity tour with secretary of a labor tom perez. secretary of housing urban development castro. we wanted to demonstrate that we in the federal government are working collaboratively across our departments and we would like to work collaboratively with the cities and counties that we visited. all of us are adopting a no wrong door philosophy to ensure
we can get veterans into care, under roof. and in order to do that we in the va have a strategy called strategic partnerships. we're trying to engage local philanthropy, landlords, business community. we want to maximize the total number of resources available to all of us this get it done. we want to leverage your political capital. we would get housing authorities committed to providing units. we want to get local veteran service organizations and military base to donate and to volunteer their time. we need to continue to work to build paths to these stronger relationships. bring people to the table, set realistic goals make plans and execute as one team with one dream. now, we in the va are not only trying to improve your numbers as we go. for example, we're working to improve access to medical care.
as the judge said, we have had 7 million more completed appointments the last year versus the previous year. 20% of those have been same day appointments. the average wait time nationally is five days for specialty care, four days for primary care, and three days for mental health care. 22% of our completed appointments have been in the community. four and a half million of the 7 million have been in the community. 2.5 million have been within va. we also work to get the backlog of claims down. the claims over 125 days were now down to 117,000 from a peak of 611,000 last march of 2014. but we're not going to rest until we get that back and claims down to zero. as i already showed, we are making progress on homelessness. all of that is progress in the
right direction. but we're not going to get to where we need to be until we transform va for the long term. and we're in the midst of that now. we call it the my va transformation. because it's the way we want you to think about va. we want you to think about va as if it were your cell phone. personalized and customized for you, the veteran. to do that we've got five strategies. strategy number one is to improve veteran experience. we're working hard to train our organization in what great customer service is. we are working with ritz-carlton, disney starbucks and others to learn about how the best customer service organizations do it. strategy two is to improve the employee experience. we know we have no hope of improving the veteran experience until we improve the employee experience. because it's the employees who actually care for veterans. so we're working hard to provide
the right training, the right leadership, and do all the things that we need to do to empower va employees. third, we need to improve our support services. our i.t. systems are often outdated. the scheduling system that got us into trouble in phoenix dates to 1985. when i was in phoenix, i sat down and worked on it myself. it's like working on a green screen with msdos. and our financial management system. believe it or not, is about 20 years old. it's actually written in a language i last programmed on the mainframe computer at west point in 1973. number four, we need to establish a culture of continuous improvement. to do that we are training va employees in lean six sigma. it's the way a that employees take charge of the system they work on. given the tools to change the
systems. like i say to va employees, let's try to be the change we want to see, just like gandhi said. and strategic partnerships, which i have already talked about. we can't do this job alone. we know we need you. we appreciate you. we embrace you as our partners. remember, your work is purposeful. there is no higher calling than the work you do. your work is monumental. you help veterans. you help families. you make a difference in the lives of others. there's no higher calling in this worrell. and you, more than anyone else, understands the inextricable link between what we do in the justice system and ending veterans homelessness. we are committed to ensuring you have all the services you need, all the support you need. we're committed to making sure every veteran has the services
they need, including those who are just as involved. just as involved veterans are welcomed at the va. in fact, they're the ones we're looking for first. we seek them to help them have access to our services. and we're trying to make sure that the criminal justice system, the criminal history probation or pending charge does not affect their eligibility. if there's a va policy or that is somehow getting in the way, please let us know. we will find a way to fix it. my e-mail address is bob.mcdonald @va.gov. don't ever settle for status quo or belief that you can't create the change yourself because you can and you will and you are. well, i just want to close by saying you all inspire me every
single day. we will succeed. i know we can. and i know we will. but we will become of all of you. so i'd like to again say god bless you all. thank you for letting me spend some of your valuable time with you. and god bless you and what you're doing. thank you very much. [ applause ]. >> va secretary robert mcdonald smoke more about veterans issues last week at a hearing on capitol hill. he also testified about a $2.5 billion budget shortfall at the va department. and some of the possible ways to address it. this was held by the house of veterans affairs committee. it's just under three hours. >> good morning, everybody. welcome to this hearing. i appreciate your attendance. we are again gathered to discuss va's budget execution for this
fiscal year. less than three weeks ago we gathered to hear testimony regarding a budget shortfall at the department of veterans affairs. i'm sure everybody may be asking why we are here again on the very same topic. and i intend to explain in just a minute. at the hearing, deputy secretary gibson was asked the following question by ms. brown. and i quote if congress doesn't act on the fiscal year 2015 budget shortfall, what is going -- what is it going to look like in the va in july and august and on october 1st. the deputy secretary said we get into dire circumstances the longer we go. but that quote, before we get to the end of august, we are in a
situation where we are going to have to start denying care to veterans in the community because we don't have the resources to be able to pay for it." the deputy secretary also testified about ant acquitted systems costs associated with the new hepatitis c drug treatments. you and i both know it's a very insidious disease. in the absence of providing the flexibility that va is seeking to plug the shortfall with choice fund money that va hospital operations would shut down in the month of august. and that nonva care authorization would cease at the
end of july. this is unprecedented. a true budgetgate if you will, of our time. first, never can i recall or other individuals that i've talked to can recall or any agency other than that matter at va completely exhausting its operational funds prior to the end of the fiscal year with the consequences for the va being cessation of hospital operations. second, never can i recall an issue of such enormous magnitude evading the direct attention of the president. and until just recently, you and i speaking about it, mr. secretary. this is not a flying under the radar issue. and i feel that it's exactly how the va and the president have treated it for an effort -- in an effort to avoid responsibility of what's going on. so that everybody understands where i'm coming from let me start by reviewing how we've arrived at this point. the first real hint of serious
financial issues came as a result of a briefing for our staffs with the va on june 4th on a very separate topic. at the conclusion of the briefing committee staff noted that there appeared to be a two to $3 billion difference between va's projected $10.1 billion obligation rate for care in the community, compared with the funds that va budgeted for care in the community. compared with the funds that ba budgeted for care in the community. the va official that was briefing agreed with the discrepancy but stated cryptically that just because va was on pace to spend $10.1 billion it didn't mean that the money to address the discrepancy was either found or was available. that assertion was repeated upon further questioning, leaving it to staff to read between the lines what was meant.
at around the same time during a june 8th visit to the cincinnati va medical center i myself began to hear rumors of an impending financial issue consistent with the cryptic warning that had been provided by va officials in a staff briefing on the 4th of june. as a result, on the 10th of june i called on either the secretary or the deputy secretary to testify on the state of va's budget. as a consequence of my calling this hearing staff received a prehearing briefing again at our request on june 18th. it was at this briefing that va for the first time publicly revealed a possible $2.5 billion shortfall in funding. not with standing this briefing there was no mention of a hospital shutdown. on the 23rd of june we received a letter from the secretary citing the looming shortfall of $2.5 billion and also requesting of the appropriations committee
a transfer of funds from the medical facility's account to the medical services account. again, there was still no mention of a hospital systemwide shutdown. and finally at the hearing on june 25th itself there was no mention of a hospital system shutdown coming in august. mr. secretary, i'm disappointed about the slow, painstaking revelation of this crisis by the department that's led by you. i understand their excuses as to why we are in it this position, however, somebody somewhere took their eye off the ball. just as congress established a cap on spending for the denver project that va busted, congress also provided a budget for va for fiscal year 2015 which the president signed into law and it, too, is now busted. in both instances va has left
congress with very little time to react to a crisis created by va's own management decisions. while we will not penalize veterans for va's management, or transparency failures, the days when va can come to congress and just say cut us a check are gone. asking for flexibility without supporting information is not enough. similar to the way a large cooperation board of directors sets a budget and a corporate management implements that budget, the president, 535
members of your current board of directors set a budget and expect you and your staff to carry out the department's mission. that is, to manage the taxpayers' resources in a fiscally responsible manner. just as emerging circumstances in the private sector might cause a ceo to go back to the board armed with information supporting a request for additional resources or flexibility, we have the same expectation. despite unsupported hints of a problem by the department, that supporting information was not provided until extraordinarily late. we've already passed legislation to take va out of managing major construction programs. perhaps we need it to bring in an outside entity to manage the department's finances. i hope not. i recognize ranking member brown for an opening statement. >> thank you, mr. chairman. and thank you for calling this hearing today to discuss the va's current budget shortfall and the possibility that va may have to close hospitals or ration healthcare. mr. chairman, i know everyone in
this room agrees that this committee is committed to providing the resources that va needs to take care of our veterans. we all need straight answers to our questions, how much is needed and why? we are all supportive to make sure our veterans get the care that they need but yet again we are faced with an 11th hour va budget crisis. we must all work together. va and congress, in order to properly anticipate the resources needed for va. the va must do a better job of predicting requirements. it is important that va starts planning, anticipating what our veterans will need and where they will need it.
we have been hearing that this shortfall is due to the increase of veterans coming to get medical care, resorting in more veterans being treated outside of va. i also think it takes care of the veterans with hepatitis c. many of whom are vietnam veterans who we recently honored in a celebration in the capital should be one of our highest priorities, but i wonder if this shortfall is fundamentally due to lack of planning and forecasting or for a variety of programs which provide services to our veterans. so today let's figure out what we need to to to ensure that our veterans are getting the healthcare they have earned and begin to if i can what steps we need to take, a fix that will prevent any more 11th hour budget crisis. in february the secretary began asking this this committee for more flexibility to move money between accounts that would
enable him to run his administration more like a business and better care for the veterans. let me repeat that. in february -- and, again, in march -- the secretary came right there and asked us to give him the flexibility to run the va like a business so he could care for the veterans. we have over 60 additional accounts that the va has to decide whether or not to allow flexibility. and as we track the vso support in providing, allowing the secretary access to charge towards funds i want to present for the record the va physician productivity is up 8.5% and it gives the account of every category that we are servicing
veterans for fiscal '15 and the increase. i want to submit that to the record. in addition -- >> no objection. >> in addition to that, i want to submit for the record a letter from each of the service organizations indicating that they support the secretary having the flexibility to move this money around. when we did the choice act the purpose of the choice act was to provide services to the veterans. we didn't say what services? just services to the veterans. and the secretary needs the flexibility enable to provide those services.
with that, mr. chairman, i yield back the balance of my time. and did you take the va's without objection? >> yes. >> the letters? >> without objection i will accept those letters. and i do appreciate you submitting those letters of support and remind my colleagues that all the veteran service organizations also support my accountability bill as well. so as we meet later on this week to talk about t i hope that we will keep that in mind. i would remind the members that this committee and the senate as well rejected on a bipartisan basis an attempt to go into the choice fund to fix the budget shortfall at the aurora hospital as well and i think we need to focus, rightly so as ms. brown has pointed out this morning, forecasting and getting a better grasp on what's going on with the dollars that are appropriated to the department of veterans affairs and that's why we've asked the secretary to be here. and i know you had to change your schedule in order to come and i appreciate that.
without question once we spoke the secretary said, i will be there, along with dr. schmidt. so, mr. secretary, you are recognized four your opening statement. i know you also have some charts you brought with you. i don't know it if we are going to post them up here or if people have -- >> we've given them out, mr. chairman. >> okay. all right. thank you, mr. secretary. you're recognized. >> mr. chairman, if i may, i'd like to start -- and i know you would agree with this -- by honoring our five service members who were senselessly killed in chattanooga. on behalf of all veterans and on behalf of our department i extend my deepest condolences to their families, their fellow service members and their friends who grieve their loss. we will never forget their service to our nation nor their supreme sacrifice on behalf of all of us and the freedom that we so cherish.
thanks to the chairman and the ranking member for joining your senate counterparts at our most recent four corners meeting at va's central office last thursday morning. and i appreciate this opportunity to it continue our dialogue publicly so veterans and all americans can understand these important issues. representing veterans and service members this morning our senior leaders of some of our most important part years, veterans and military service organizations and i want to thank them for being here as well. a year ago today at my senate confirmation hearing i was charged to ensure that va is refocused on providing veterans with the highest quality service that they've earned. i welcome that opportunity. for the last year i've been working with a great and growing team of excellent people to fulfill that sacred duty.
over the last year since my swearing in nine of the 17 top leaders in va are all new. we have to get the right people on the bus and we have to get them in the right seats on the bus. because of their hard work, va has increased veterans' access to care and completed 7 million more appointments this year than last year. 2.5 million within va and 4.5 million in the community. so 7 million total, more than last year, 4.5 million in the community, 2.5 million inside va. we've increased va care in the community authorizations, including choice, by 44% since we started accelerating access to care a year ago. that's 900,000 more authorizations than the previous year. while choice has been just a small proportion of that 4.5 million, it's on the rise and utilization has doubled in the last month.
today because of growing -- growth in access the department is struggling to meet veterans' needs through the end of the fiscal year. we need your help. you've already appropriated funds to meet these needs, but you haven't given me the flexibility or the authority to use them. without flexibility we will have no option at the end of july but to defer all remaining nonchoice care in the community authorizations until october. provide staff furlough notices and notify vendors that we cannot pay them as we begin an orderly shutdown of hospitals and clinics across the country. these are unfortunate conclusions to an otherwise productive year of progress. in had fact, we've doubled the capacity that we thought was required to meet last year's demand by focusing on four pillars: staffing, space, productivity and va community
care, or what we sometimes call choice care. we have more people serving veterans. since april 2014 we've increased net staffing by over 12,000, including over 1,000 new physicians and we've used choice act funding to fire over 3,700 medical center staff. we have more space for veterans. we've activated over 1.7 million square feet since last fiscal year and increased the number of primary care exam rooms so providers can care for more veterans each and every day. we're more productive, identifying unused capacity, optimizing scheduling, heading off no-shows and we're also stopping late appointment cancellations and extending clinic hours at night and on the weekends. we are aggressively using technology like telehealth,
secure messaging and e consults to reach more veterans. clinical output as you can see in this chart has increased 8.5% where our healthcare budget has increased only 2.8%. we are aggressively using care in the community. the choice program and our accelerating access to care initiative increased veterans options for care in the community. we provided va care in the community authorizations, including choice, for 36% more people than we it did over the same period last year. a total of 1.5 million individual va beneficiaries. in short, we're putting the needs and expectations of veterans and beneficiaries first, empowering employees to deliver excellent customer service, improving or eliminating processes and shaping more productive and veteran centric internal operations.
that's my va. our top priority to bring va into the 21st century. our strategy is paying dividends for veterans. we've increased va care in the community authorizations, including choice, by 44% since we started accelerating access to care a year ago. that's 900,000 more authorizations than the previous year. between the end of june last year and may we've completed 56.2 million appointments, a 4% increase over last year. and there were 1.5 million encounters during extended hours, a 10% increase. that's particularly important to our women veterans. even with that increase we completed 97% of appointments within 30 days, 93% within 14 days, 88% within 7 days and 22% same day appointments. for specialty care, wait times are down to an average of five face.
for primary care, wait times are down to an average of four days. and we have an average of about three days for mental healthcare. so we're making verifiable progress for veterans and with your support va can be the best customer service agency in federal government. but even as we increase access and transform, important challenges remain and there will be more in the future as veterans' testimony graphics evolve. it's now clear that the access crisis in 2014 was predominantly a matter of significant mismatch of supply versus demand exacerbated by greater numbers of veterans receiving services. that sort of imbalance predicts failure in had any business, public or private, especially when we promise veterans' benefits without the flexibility to fulfill the obligations. so a fundamental problem is va working to a budget, not to the
package of benefits and services veterans have earned and have been promised by congress. budgets are static, our requirements are fluid, and changes in veterans' needs and preferences for care far outpace the federal budget cycle. here is an example. last year on average we added 51,000 veterans to our healthcare rolls each month. this year -- this year the average monthly -- monthly average of new enrollees has been 131,000. 131,000. that's 147% increase. and we welcome them all and i'm sure you do, too. but we can't miss that today enrolled veterans only rely on va for 34% of their care. just 1 percentage point growth in reliance increases costs by approximately $1.4 billion. let me say that again.
today enrolled veterans only rely on va for 34% of their care. just a 1% increase, a 1 percentage point increase in reliance increases costs by $1.4 billion. so we're working hard to best serve more veterans but without flexibility we can't provide what they need the way you've directed it. we've reached a decision point. congress can either shape a different benefit profile for veterans or give va the flexibility and money for legislated entitlements. my worst nightmare is a veteran going without care because i have the money in the wrong pocket. i earlier compared the inflexibility we faced to having one checking account for gasoline in your household and one checking account for groceries, the price of gasoline falls in half and you can't move money from the gasoline account
to the food or grocery account. well, the inflexibility we're talking about today is even worse than that, it's even more puzzling. i can't move money from the food account to another food account. from a care in the community account to another care in the community account. altogether we have over 70 line items of budget that are inflexible, yet the veteran has choice. freed up they would help us give veterans, the va that you envision, and that they deserve. we need flexibility to move money from line item to line item just like you would a business. we need flexibility to move money from va community care to choice and from choice to va community care. both are care in the community. we need flexibility to transfer both directions depending upon demand because we will not ever be able to predict the demand exactly. we owe it to veterans and ourselves to be more agile 15 years into the 21st century.
it was february we asked for flexibility to move resources. it was may when we again asked for flexibility to use some choice program funding to provide care in the community. i'm asking again for the simple flexibility to serve veterans with the money you have already appropriated so we can resource the capacity that we've grown. more flexibility will go far toward meeting veteran care and increasing access across the country. money for the denver replacement medical center will be depleted by early october and work on the project will cease unless we receive congressional authorization for the full cost of the project and flexibility in fiscal year '16 to transfer $625 million of our existing resources to the major construction account. we have presented several plans to congress, the latest being on
june 5th and we will have an update shortly. we anticipate the corps of engineers will award a contract to complete the facility in october and assume construction management on the project if we receive full authorization and that flexibility that we seek. to improve community care for veterans we need to streamline an antiquated business processes for purchasing care. for years a variety of authorities and programs have provided community care to veterans and i have trouble holding this up and talking at the same time, but you have had this at your table. today we have seven different programs for providing community care. each one has its own exclusions, each one has its own payment options. it's incredibly confusing. we have traditional va care, we have choice, we have patient-centered community care, we have two separate plans for emergency care in the community, we have something called arch,
we have indian health service and tribal health program and these don't include other programs for veterans' beneficiaries. it's all very difficult to understand. veterans don't get it, providers don't get it, our employees don't get it, and i can tell you from our breakfast earlier last week members of congress don't understand it completely. we look forward to continuing to work with you on an integrated network of va and community care and a single integrated reimbursement system to get the providers we need on board. you see what happens is providers cherry pick the program to get the highest reimbursement rates. on may 1 we sent you our proposal, the purchased healthcare stream lining and modernization act, a bill to make critical improvements in provider agreements and give us the flexibility to provide timely local care to veterans.
our proposal modeled on the purchased care authority in the choice act includes protections for procurement integrity, provider qualifications and reasonable cost. flexibility with respect to choice is central to resolving the budget shortfall and ensuring veterans continue receiving timely care as we strive to meet the 30-day access goal. on top of the $7.5 billion of va community care we already provide, congress added new entitlements for veterans in the choice act, but there are many programs that the choice act doesn't cover. because choice authorizations and community care authorizations are in different buckets, we have a funding short fall, in spite of the fact that both types of care are community care. at the current rate we expect care in the community in 2015
will cost an additional $2.5 billion. new hepatitis c drugs for veterans will cost an additional $500 million. all we seek is flexibility. flexibility through limited authority to use money for community care to the extent those exceed our fiscal year 2015 budget. to meet these growing requirements next year va needs the adequate funding the president's 2016 budget request provides, but the house proposed $1.4 billion reduction means 688 million less for veterans' medical care meaning as many as 70,000 veterans may not receive care. further, it means no funding for four major construction projects and six cemetery projects and 17,000 veterans and family members may not receive va
burial honors. the construction budget was cut 50% and that's at a time when over 50% of our buildings are over 50 years old. the increase this in requirements were seen anticipates greater challenges ahead. services and benefits peak years after conflicts end. remember during my budget testimony i talked about the fact that we're now seeing the peak years of the vietnam crisis, even though the vietnam war ended 50 years ago. the healthcare requirements and the demand for benefits increase as veterans age and exit the work force. so full funding of a 2016 budget request is a critical first step in meeting these challenges, but we have to look much further ahead for the sake of afghanistan and iraq veterans. in 1975 just 40 years ago the year i graduated from west point, only 2.2 million american
veterans were 65 years old or older. that's 7.5% of the veteran population. by 2017 we expect 9.8 million will be 65 years or older, that's 46% of the veteran population. what does that mean? well, consider this. va provides the best hearing and technology -- hearing aid technology anywhere. medicare doesn't cover hearing aids and most insurance plans have limited coverage at best. so choosing va for hearing aids saves veterans around $4,200. as va continues to improve access, more veterans are going to come to the va because they want to and because it makes financial sense. so it's a foregone conclusion that the cost of fulfilling our commitments will grow for the foreseeable future. it bears repeating that the 2014 access crisis was in part a
vietnam debt, not a debt of afghanistan and iraq where service members still serve. so we can't be short sighted, we have to respond today with a long-term view that underlines a commitment to va transformation. veterans who have preserved our freedom are watching us, as the military draw down continues service members are also watching us. and young men and women who might choose to serve are watching us. they rightly expect us to fulfill our obligations with the same degree of dignity and fidelity with which they put their lives on the line for our nation. if we choose shutdown we fail all of them. given the commitment we made at breakfast last week to keep working together, i know we will honor all of our obligations to veterans and their families of every generation. thank you very much, mr.
chairman, and committee. we look forward to your questions. >> thank you very much, mr. secretary. i would like to ask, you talked about additional enrollees this year and i don't have the numbers right this front of me. did you say that was a net number so it would include those that died or is this just new enrollees? so you had 100,000 new enrollees, how many folks tied and came off the system? >> i don't have the number, mr. chairman, of how many died, but i can tell you that with 7 million more appointments this year versus last, that a lot more are alive than are dead. >> and i understand that, but you made a point of talking about how many new people enrolled into the system and i just want, for clarity purposes, i think it's important not just to focus only on that number. >> we will get you that number. >> that we get a net number. >> we will get you the number of the number of people who died and the number of enrollees. >> and i think the simple question i think that we need to talk about today -- and i know you wanted to focus on the
appropriations process which is still ongoing, i will hope very soon that the senate will move and move a piece of legislation so we can get the va budget passed, i think it's critical that we get that done, but if we didn't have the choice program to fall back on today, that $10 billion, $9 billion, whatever the number is today, how would this problem be solved? >> well, mr. chairman, we agree with you, as we said last week, and as we've said from the very beginning, we very much favor the choice program. the choice program is the shock absorber that has allowed us to care for veterans at a time when -- when more veterans are entering the system and when that care is necessary. you know, the choice program allocated $10 billion for care over three years. we're already spending $6 billion for community care from the current va budget. so the idea that has been propagated in the media that